In the end, either bitcoin is banned or it is regulated. But how could bitcoin be regulated, what kind of procedures maybe implemented? One thing I could imagine is that Government control the exchange that any out bounding bit-coin transfer should be transferred to an "registered" address. Very similar to current banking account/brokerage account. (And even transferring in)Secondly, transferring to non-registered account to registered account may occur some kind of tax.Thirdly, they may implement their own miner and expel UN-registered account related transferred.

It would be a lot like Bittorrent I imagine, there would be lots of threats and takedowns but in the end nothing will really be done about it because it would be too expensive and piss off too many people.

This seems to be an issue with anarchists, not statists. Regulation can be voluntary by using registered addresses. Taint can be removed by using registered taint-removal algorithms. You can choose to keep separate wallets for online use, but not in the brick and mortar world. It's the opposite case with fiat cash. With fiat, you can keep separate books with cash and your online transactions are tracked.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.

This seems to be an issue with anarchists, not statists. Regulation can be voluntary by using registered addresses. Taint can be removed by using registered taint-removal algorithms. You can choose to keep separate wallets for online use, but not in the brick and mortar world. It's the opposite case with fiat cash. With fiat, you can keep separate books with cash and your online transactions are tracked.

I am not for or against regulation here, but wanted to know what could happen. If bitcoin becomes big, there is no way government just sitting there and doing nothing.

In the end, either bitcoin is banned or it is regulated. But how could bitcoin be regulated, what kind of procedures maybe implemented? One thing I could imagine is that Government control the exchange that any out bounding bit-coin transfer should be transferred to an "registered" address. Very similar to current banking account/brokerage account. (And even transferring in)Secondly, transferring to non-registered account to registered account may occur some kind of tax.Thirdly, they may implement their own miner and expel UN-registered account related transferred.Any thoughts?

You say what they will attempt to achieve, but not how they will achieve it. Can you tell us how they would enforce anything you are suggesting?They can control the exchange, but I don't exchange Bitcoins, I trade them directly for goods and services.They can tax their own whitelisted addresses, but I can choose not to use those addresses by creating as many of my own as I wish.They can mine and exclude non-whitelisted addresses, but I can mine and include them. They will earn less money on the blocks they find, and I will earn more. They will have to tax their citizens and create debt to continue to compete with me. Their citizens will get tired of paying for their mistakes and ignore whether an address is whitelisted or not. Prohibition typically results in unintended consequences. Bitcoin is so easy to use and already world wide that any government attempting to enforce regulation would require a total police state.

But businesses with a premise could not behave like total underground, let's say your grocery stores, they may sell you in underground un-registered address, but when they purchase from a big wholesaler, they need something to pay, since they earned bitcoins, they either have to exchange it for fiat, or buy using whitelisted address, in this way, the bitcoin could be taxed at this step.

It is very hard for a big wholesaler to not be monitored and controlled. So many people and so many hard visible assets are involved.

I'm wondering if we might start to see hybrid payments. Part bitcoin, part dollar. Dollars to pay expenses based in dollars and Bitcoin for real money. It sounds like it would be overly-complex but there way be a way to make it run smoothly.